Discretionary trusts have long been a cornerstone of business,
asset and wealth structuring though their benefits of protecting
assets and allowing income to be streamed to beneficiaries in the
most tax-effective manner.
Over recent years changes to state duties legislation have
reduced these benefits by imposing additional duties on
discretionary trusts deemed to be foreign by the nature of their
beneficiaries, regardless of the interest they hold (or may hold)
in the trust assets.
While the duties legislation in each jurisdiction has its own
definition of a foreign trust – commonly involving a
non-Australian citizen or permanent resident holding a
'substantial interest' in the trust – the Duties
Act 1997 (NSW) links its definition of foreign person to the
definition under the Foreign Acquisitions and Takeovers Act
1975 (Cth), under which any foreign beneficiary –
whether primary, secondary, general, default or otherwise –
of a discretionary trust is taken to
